Taxation: VAT on Retrofitting Buildings

Lord Howarth of Newport Excerpts

Thursday 25th July 2013 Lords Chamber

[Lord Newby]

My Lords, I have a great deal of sympathy with the noble Lord because my first job as a new employee was working on VAT. It was very complicated when it was introduced; it has got more complicated since then and should not be allowed to get any more so.

[Lord Howarth of Newport]

My Lords, is it not irrational to have a VAT regime that incentivises demolition and new build and penalises alteration and refurbishment? Is that not just as perverse in relation to heritage conservation as it is to energy saving? Will the Government negotiate with real determination in Brussels to secure a sensible regime?

[Lord Newby]

As the noble Lord said, the VAT regime is an EU regime. Any attempt to change it will require unanimity as it is a tax measure. Opening up the regime would, in my view, open up a Pandora’s box, and I do not recommend that as a policy approach.